Aviation Insurance: Protecting Yourself While Traveling Abroad — Originally published in BusinessAir Magazine, August 2015, Volume 25, No. 8.
Aviation insurance – both property and liability coverage – is always a vital element of aircraft ownership, but it is especially important to review and understand the insurance coverage on your aircraft before permitting the aircraft to travel outside the United States. If your aircraft is operated by a management company, that company may perform this service for you, but do not assume that this is the case without express confirmation. There are many countries around the world where aviation insurance is highly regulated, and a failure to secure proper coverage may subject aircraft owners to severe penalties. If you don’t use a management company, contact your aviation insurance broker or the insurance provider directly regarding international travel. The provider is the actual underwriter on an insurance policy and it pays the claims. The aviation insurance broker sources and arranges the coverage.
Not all insurance companies are licensed in all countries, and not all insurance companies understand the minimum liabilities coverages for a particular country. Many countries have their own very specific requirements. If international flights are planned, the insurance provider selected to provide coverage for the aircraft should not only be financially stable and well established in the aviation industry, but also familiar with the differing requirements from country to country. Below are some examples of certain country requirements. They are offered as examples and are not intended to be a comprehensive list. It is also important to note that if the aircraft is financed, the lender likely has additional restrictions on the international destinations to which the aircraft can be taken, including areas of hostility (likely not well defined) and any country or countries that do not have full diplomatic relations with the United States.
Mexico. Insurance requirements specific to Mexico apply to both private non-revenue and charter operations. Mexico requires a liability insurance policy which must be in Spanish, peso denominated and issued in addition to the primary liability policy. Additionally, the aircraft liability insurance is required to be secured from a company licensed under the laws of Mexico to write aircraft liability. The policy must indicate whether the flight is being flown as a private or charter flight and must be aircraft-specific (fleet policies are not acceptable). The policy must be submitted with the landing permit requests, and the original policy must always be kept onboard. Failure to carry the original policy on board could result in an aircraft seizure in the event of a ramp check.
European Union. Within the European Union (“EU”) Regulation (EC) No 785/2004 (as amended by Regulation (EU) No 285/2010) applies to all aircraft operators flying within, into, out of or over the territory of an EC Member State. The purpose of this regulation is to set an operator’s minimum insurance requirements for passengers, baggage, cargo, and third parties, and includes war risk and terrorism coverage. The minimum level of required insurance depends upon the number of passengers carried and, with respect to liability coverage, the maximum take-off weight (“MTOW”) of the insured aircraft. War risk and terrorism coverage is required for baggage and cargo losses as well as the hull. This is separate from worldwide insurance, which must also be carried onboard the aircraft, and coverage limits need to be denoted in Special Drawing Rights (accepted currency units typically include USD or Euros of SDRs; however, this may change depending on where you’re operating). EU policies differ from standard worldwide insurance coverage, both in terms of minimum liability limits, territory covered, currency units, and specific required verbiage. It is not unusual for an EU country to perform ramp checks, and authorities will want to see written evidence of insurance coverage specific to the EU.
Hong Kong. Hong Kong insurance requirements are also based on MTOW. Policies must indicate the name of the operator, specify insurance currency units and contain specific language regarding coverage for third-party liability, war risk, and allied perils including baggage and cargo. Necessary permits will not be issued if the documentation doesn’t contain all the required verbiage, and it is not unusual to receive revision requests. We’ve seen cases of landing permits denied because insurance currency units are not included.
Canada. Canada has a mandatory insurance system which is very specific. Canadian requirements are based on MTOW and number of passengers carried. The specific details can be found at Canadian Aviation Regulations 2014 Section 606.02 adopted by the Transport Canada ministry.
The examples above are not a comprehensive list. They are, instead, illustrations intended to highlight the extent of the differences between countries and the necessity to have a qualified insurance broker, provider and management company on your aviation team.
Please contact Amanda Applegate at 310-392-5200 or firstname.lastname@example.org.